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A proposed affordable housing complex in Amagansett is fully funded after receiving a $7 million state grant.

The project, which has a working title of AMG 531, calls for 37 cottage-style rental units, a common building, and a sewage treatment system to be built on the north side of Montauk Highway.

It will be open to people living or working in East Hampton Town who are paid up to 130 percent of the area’s median income, which is $144,040 for a family of four.

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South Fork residents face challenges finding affordable housing in an area where the second-home market has driven up real estate values and the region’s geography makes a difficult commute for those living farther west.

“We’re delighted that the governor and the commissioner of Homes and Community Renewal recognize the need for workforce housing here,” East Hampton Housing Authority executive director Catherine Casey said in a news release. “It’s what we need, when we need it.”

The market rate for the units will start at $1,527 per month for a one-bedroom apartment, according to information on the housing authority’s website.

The project received overwhelming support during a town planning board hearing on May 2. The planning board has not voted on the project.

The complex is to open in 2021 and applications could be available next year, according to the housing authority’s website.

The project will be financed through a combination of town, Suffolk County and state funding; state and federal tax credits; and private investment. The housing authority has partnered with Georgica Green Ventures, which also is working on two affordable housing complexes in Southampton Town, to develop the project.

To offset the costs of enrolling additional students in the Amagansett school district, the housing authority in December 2017 agreed to make a $25,000 payment in lieu of taxes to the district in the project’s first year. That payment will increase 2 percent each year after.

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The state funding was announced by Gov. Andrew M. Cuomo on May 10 as part of more than $200 million the state is awarding to build or preserve more than 2,800 affordable apartments. Four Long Island affordable housing projects, including proposals in Islip, Port Jefferson and Southold, were awarded a total of $25.6 million. The money comes from the New York State Homes and Community Renewal agency.